GBP/USD Forecast: Edging Higher as Focus Shifts to UK GDP

• Traders are awaiting next week’s US inflation data.

• Fed Chair Jerome Powell refrained from materially hardening his tone on inflation.

• Investors are awaiting economic growth data from the UK.

Today’s GBP/USD forecast is slightly bullish. Sterling made small gains against the dollar on Thursday as investors continued digesting Powell’s speech. Fed Chair Jerome Powell refrained from materially hardening his tone on inflation, reinforcing bets on a more gradual tightening of US monetary policy.

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Despite the positive US job figures from last week, Powell repeated his belief that “disinflation” was in progress during a Q and A session on Tuesday.

Traders will be watching for hints on the Bank of England’s (BOE) future moves in the economic growth data scheduled for release on Friday. Last week, the central bank increased borrowing costs for the tenth time to 4% but gave the impression that it was about to stop raising rates.

In light of indications that inflation is slowing, money markets are now pricing in a peak in BoE rates at 4.25% by the summer.

According to a study of recruitment businesses released on Wednesday, the British labor market showed some symptoms of cooling in January as starting pay for those employed for permanent employment grew at its slowest rate in nearly two years.

BOE governor, Andrew Bailey, will address MPs on the central bank’s decision to hike rates to a 14-year high on Thursday. He stated last week that data on the job market would be crucial for determining how rapidly inflation declines.

Traders are also awaiting US inflation data that will come out next week and guide the Fed’s next move.

GBP/USD key events today

Investors will get more employment data from the US when the initial jobless claims report is released later today. This will show the state of the labor market.

GBP/USD technical forecast: Corrective bullish move faces strong resistance

After a corrective bullish move, the 4-hour chart shows GBP/USD trading at the 30-SMA. The RSI is also trading near the pivotal 50-level. Bulls took over at the 1.1974 support with a strong engulfing candle that broke above the 1.2050 key level. 

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At the moment, bulls are approaching the 30-SMA, which might pose a strong resistance. A bullish takeover will only be confirmed if the price crosses above the SMA. However, the bearish move will continue if the SMA holds as resistance.

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